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Japanese Government Provides Covid-19 Wage Subsidy Plan

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Business across Japan have been severely affected by the economic shock caused by the spread of the Covid-19 virus. We are working with many of our clients to help them cope during one of the most challenging times since the Great Depression.

As our clients have different business structures and work across a variety of industries, the correct response may be vary according to their specific needs. However, there are some basic strategies that should apply to all businesses.

For example, every business should make sure that it has access to enough cash by getting approved for a loan or line of credit. You might not need the funds now or even later. But, it makes sense to get the approval in place just in case the situation worsens. 

Also, the Japanese government just announced a broad relief package protecting employment that covers part of the employer’s payroll cost.

To qualify, employers must pay 60 percent of the wages if employees are put “on hold” or temporarily suspended due to the company’s business reasons.  In this case, the Japanese government will cover 67 percent of the employer’s costs for large companies and 80 percent for SMEs.  The amount goes up to 75 percent and 90 percent respectively if a company doesn’t terminate the employment agreement. 

These benefits are not limited to employees who are covered by Japanese employment insurance.  It also covers employees who are not enrolled the employment insurance program.  And, the six month enrollment requirement has been lifted as well. 

The conditions are:

1) Sales have to have decreased by five percent or more.

2) A plan has to be submitted between Jan 24 to June 30th, 2020*.

*The plan can be submitted even after lay-offs have taken place.

If you’d like more information, please contact us.

The official government plan description can be found at:

https://www.mhlw.go.jp/content/000615395.pdf